The House of Representatives has passed on the 18th of April 2014 the new Insolvency Framework as part of the Country’s undertakings towards the international providers of financial support to Cyprus and as part of the metamorphosis of the Insolvency Regime in Cyprus. The relevant legislation forming the Insolvency Framework came into force on May 7th, 2015, the day of its publication in the Official Gazette of the Republic of Cyprus [five laws and a set of regulations].
The main objectives of the Insolvency Framework Reform are:
- Creating appropriate incentives for debt repayment, thus contributing to the reduction of non-performing loans;
- Opportunity to protect the primary residence, where possible based upon strict eligibility criteria;
- Introduction of a new mechanism that would provide full and rapid relief to a debtor with no income and no assets, with very low overall debt;
- Incentives for the preservation and restoration of companies through restructuring of companies and their debt and so they have the opportunity to become viable and reduce their debts and keep their personnel, whilst maximizing the value of the company as it is (“as going concern”)
- Modernization of the laws concerning the liquidation and bankruptcy of natural persons, so the liquidation and bankruptcy proceedings take place in a short time and efficiently.
Part of the legislative framework is the Insolvency Consultants Law of 2015 (the “Law”) along with the relevant regulations which provide the regulation and governance of the insolvency consultants. This law has been set up in an effort to secure the proper and efficient application of the procedures and controls required as per the provisions of the Insolvency Framework.
As per the provisions of the Law only an approved and licensed Insolvency Consultant will be able to act as follows:
- In relation to a legal person (i.e. company) as liquidator, temporary liquidator, receiver, administrator or investigator;
- In relation to a physical person, as bankruptcy administrator, temporary receiver of the property or special administrator of the property or the business of this person or as consultant for the repayment schedule;
- In whatever capacity, which according to the Law, is defined as an act or falls under the capacity of a person acting as an Insolvency Consultant.
Any person who has been acting under such capacity for any case which has commenced prior to the publication of the Law, they will be able to proceed accordingly until the process has been finalized or until they have been released of their duties.
One of the three governing bodies which act as the authorizing and supervisory bodies for Insolvency Consultants is the Cyprus Bar Association.
“Michael Kyprianou & CO LLC has been one of the first law firms who have received the relevant authorization and license by the Cyprus Bar Association for some of its members to act as Insolvency Consultants”.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought on your specific circumstances. For further information, please contact Ioanna Solomou.